On October 20, 2022, the US Department of the Treasury (Treasury) issued, for the first time, Enforcement and Penalty Guidelines (Guidelines) for the Committee on Foreign Investment in the United States (CFIUS or the Committee). The Guidelines describe three categories of conduct that may constitute a violation, the process CFIUS generally follows in imposing penalties, and some of the factors the Committee considers in determining whether a penalty is warranted and the scope of any such penalty. The Guidelines also encourage prompt and complete self-disclosure of any conduct that may constitute a violation.
On October 24, the White House announced that President Biden signed Executive Order (EO) 14088 (amending EO 13851) which substantially expands the Nicaragua sanctions program with sectoral sanctions authorities, exposing individuals and entities operating in identified sectors to blocking sanctions. Specifically, the amended EO identifies the gold sector, which affects about $900 million of exports, most of it to the United States. Entities and individuals that operate or have operated in that sector are now at risk of US blocking sanctions. The EO also allows for the future identification of additional sectors that could become subject to sanctions, if warranted.
Continue Reading US Government Imposes New Sanctions and Visa Restrictions on Nicaragua
On October 7, 2022, in a move that was hailed by senior U.S. government officials as a paradigm shift in U.S. export controls policy toward China, the Department of Commerce’s Bureau of Industry and Security (BIS) issued an interim final rule that amends the Export Administration Regulations (EAR) to impose new and expanded controls on advanced computing integrated circuits (ICs), computer commodities that contain such ICs, and certain semiconductor manufacturing items. Transactions for supercomputer end-uses and transactions involving certain entities on the Entity List are now subject to additional export controls, as are certain semiconductor manufacturing items and transactions for certain IC end uses. U.S. person activities as they relate to certain semiconductor activities in China are also now restricted.
Certain aspects of the rule, specified below, including the availability of license exceptions, became effective immediately on October 7, 2022. The new restrictions on U.S. person activities under § 744.6 became effective on October 12, 2022. The remainder of the provisions with a delayed effective date are specified below and will become effective on October 21, 2022. BIS is also accepting public comments on the interim final rule through December 12, 2022.
Separately, also on October 7, 2022, BIS issued a final rule, which revised the Unverified List (UVL) and clarified the activities and criteria that may lead to the addition of an entity to the Entity List. BIS stated that a sustained lack of cooperation by the host government in a country where an end-use check is to be conducted, such as China, that effectively prevents BIS from determining compliance with the EAR, will be grounds for adding an entity to the Entity List.
The U.S. policy goals behind the new rules are ambitious and seek to degrade China’s advanced computing capabilities in an unprecedented manner. As summarized recently by National Security Advisor Jake Sullivan: “On export controls, we have to revisit the longstanding premise of maintaining ‘relative’ advantages over competitors in certain key technologies. We previously maintained a ‘sliding scale’ approach that said we need to stay only a couple of generations ahead. That is not the strategic environment we are in today. Given the foundational nature of certain technologies, such as advanced logic and memory chips, we must maintain as large of a lead as possible.”
The broad implications of these new rules, along with their efficacy from a policy standpoint, may take some time to come fully in to focus. For now, it is clear that any U.S. or non-U.S. individuals or entities that play any role in the global semiconductor supply chain—whether as manufacturers, producers, consumers, or otherwise—need to carefully review the new rules to determine what is required to comply and, if necessary, seek guidance or a license from BIS.…
On August 2, 2022, the Committee on Foreign Investment in the United States (“CFIUS” or “Committee”) released its statutorily required Annual Report to Congress for Calendar Year 2021. CFIUS is the inter-agency body charged with conducting national security reviews for certain foreign investments in the United States. While the CFIUS process is generally confidential, the annual report provides aggregate data on certain CFIUS activities and offers industry a window into current Committee trends.
Continue Reading Key Takeaways from the 2021 CFIUS Annual Report
Between April 18 and May 2, 2022, the US government continued to ratchet up economic sanctions, export controls, and other restrictive trade measures targeting Russia. Most significantly, on April 21, President Biden issued a Proclamation prohibiting “Russian-affiliated vessels” from entering US ports. Otherwise, the US government has focused on utilizing its existing authorities to impose further costs on Russia.
Over the last two weeks of April, the US Treasury Department’s Office of Foreign Assets Control (OFAC) designated over 40 individuals and entities including Transkapitalbank (TKB), re-issued an expanded set of Ukraine- / Russia- Sanctions Regulations (URSR), and issued several new or revised general licenses, including one relating to the provision of assistance by nongovernmental organizations, and 8 Frequently Asked Questions (FAQs).
Separately, the Commerce Department’s Bureau of Industry and Security (BIS) continues to be focused on restricting the Russian aviation sector, issuing a temporary denial order (TDO) on the Russian cargo aircraft carrier, Aviastar, for operating aircraft on flights into and out of Russia without the BIS authorization required under the Export Administration Regulations (EAR), and providing weekly updates to its list of commercial and private aircraft operated in potential violation of the EAR.…
Between April 5 and April 17, 2022, the US government took several steps to ratchet up economic sanctions, export controls, and other restrictive trade measures targeting Russia and Belarus.
President Biden issued a new Executive Order prohibiting US persons from engaging in new investment in Russia, and also establishing a framework through which US persons could in the future be prohibited from providing certain services to any person in Russia.
The US Treasury Department’s Office of Foreign Assets Control (OFAC) designated a darknet market and cryptocurrency exchange, several Russian banks and their subsidiaries, and a number of companies allegedly assisting the Russian military by adding them to the Specially Designated Nationals and Blocked Persons (SDN) List pursuant to Executive Orders (EOs) 14024 and 13694. OFAC also published seven new and amended general licenses, including authorizations related to the recent designations of Public Joint Stock Company Sberbank of Russia (Sberbank), Joint Stock Company Alfa-Bank (Alfa-Bank), and Public Joint Stock Company Alrosa (Alrosa).
Separately, the US Commerce Department’s Bureau of Industry and Security (BIS) announced new, stringent export controls so that all items subject to the US Export Administration Regulations, except items designated “EAR99,” require a license for export, reexport, or transfer (in country) to or in the Russian Federation and Belarus.…
Between March 24 and April 1, 2022, the US Treasury Department’s Office of Foreign Assets Control (OFAC) designated over 400 Russian elites, Duma members, and defense companies as Specially Designated Nationals (SDNs) pursuant to Executive Order (EO). 14024. OFAC also published four new, limited General Licenses regarding certain humanitarian, import-related, diplomatic, and journalistic activities, added one new FAQ, and published a determination for EO 14024. Separately, the White House has indicated that the United States is seriously considering imposing secondary sanctions against companies engaged in evasive activities with Russia or in business that otherwise undermines sanctions.
Additionally, on April 1, the Commerce Department’s Bureau of Industry and Security (BIS) added 120 entities in Russia and Belarus to the Entity List.
As of March 20, 2022, a new Executive Order (EO) prohibited certain imports, exports, the transfer of US dollar banknotes to Russia, and new investments involving certain sectors of the Russian economy. The US Office of Foreign Assets Control (OFAC) also issued new General Licenses and Frequently Asked Question (FAQ) guidance. Additionally, the US Department of Commerce’s Bureau of Industry & Security (BIS) announced new regulations to control the export, reexport, and transfer (in country) of certain luxury goods to or within Russia and Belarus. BIS also identified numerous aircraft subject to US export controls jurisdiction that had flown to Russia without a license, and issued a reminder regarding the restrictions under General Prohibition 10 under the Export Administration Regulations (EAR) of servicing such aircraft.
Key points of these US sanctions developments and export controls are summarized below.
For a summary of US sanctions and export controls adopted between February 21 and March 8, 2022, see this Steptoe blog post.…
Since February 21, 2022, the United States has joined a coalition of countries imposing sanctions in response to Russia’s invasion of Ukraine. New US sanctions and export controls are wide ranging and complex, significantly impacting trade and related financial transactions between the US and Russia, as well as Belarus. They also affect transactions and exports from outside the United States in many areas of commerce. The following is a high-level overview of recent US legal developments as of March 8, 2022.
Additional resources can be found on Steptoe’s “Sanctions against Russia: Implications for Business and International Trade” page.…
On November 12, 2021, the US Treasury Department’s Office of Foreign Assets Control (OFAC) designated the Eritrean Defense Forces, the Eritrean People’s Front for Democracy and Justice (PFDJ), two government-linked commercial entities, the head of the Eritrean National Security Office, and a prominent political advisor as Specially Designated Nationals (SDNs) pursuant to Executive Order (EO) 14046 of September 17, 2021, in response to the ongoing military conflict and humanitarian crisis in northern Ethiopia. These are the first designations made under the EO and OFAC’s recently adopted Ethiopia-related sanctions program.
According to a Treasury Department news release, the designations target Eritrean actors that have contributed to the situation in northern Ethiopia and “undermined the stability and integrity of the Ethiopian state.”…